How We View Investing
We seek to outperform for our clients by identifying the most skilled allocators of capital and buying them at a discount to fair value.
We believe the best allocators of capital are companies that:
- Grow assets when their economic returns are above the cost of capital
- Improve economic returns when the Economic Return on Investment = the Discount Rate (the returns demanded by investors), or
- Shrink assets when businesses cannot earn the cost of capital.
Our valuation approach is rooted in the financial axiom that the value of any investment is the present value of the future net cash receipts. We utilize economic return and asset growth to drive proprietary forecasts of Net Cash Receipts. These forecasts incorporate analytical insights derived from fundamental research.